fiscal year 2013 with the balance of $53.2 million in assets and we ended up with a balance of $73 million. >> excuse me are we on item no. 6? >> we are still under the audit. yes. >> i'm sorry. do you need to call that item? >> yes. >> i apologize. >> item 6 discussion item for financial period 2013. pamela levine. >> i'm sorry for jumping the gun. i'm so excited. as i mentioned we ended up with a balance of $77.3 in net assets.

before anybody gets excited about that, we have in terms of reserves and obligations, we have $68.6 million. when you net those out, you are just looking at $8.7 million that is quasi free, but it's not, but, so that's our room if every obligation is realized and reserve is realized in the next fiscal year. so, that, you know, we are not a wash with money. let's put it that way. so the $24 million increase in net assets between 2011-2012 and 2013, consist of $20.5 million in a combination of utilization in a city health

plans reserve which we call -- what you may have heard before and the savings conversion from the pharmacy medicare benefits. there was $1.5 million in the flex plan for 2013. $3.1 million net decrease in the blue shield's fully in insured's plan from july through december by the 2 percent premium pledge and $1.6 million net increase in other benefits. so, that nets you -- us out to the $77.3 million. we have a net point 6 million.

that is a continue -- continue contingency in reserves. $9.1 million in initiatives to reduce cost and $3.8 million in early retirement in insurance program that we have to spend by the end of 14. $3.4 million in premium credits for those units that accepted the 90-83 in #5shgs 2015. what are the next steps? the controllers will public the annual financial report which you may have heard

kafrd. sometimes around the beginning of the month and that is contain a high level of dbi's funding and this is a separate audit we have to do and it is available on our website we posted it and we also have copies for anybody that is interested. and then as i mentioned, the reserve levels will be evaluated in february 2014. i am open to any questions. >> questions? >> thank you. i noted in the financials that we had a very large increase in the contributions receivable from bodies employers and employees and that appears to have been because of timing issue. the

way we can ensure it is timing issue is that it was resolved given the next pay period and we are on track with employer contributions and employee contribution. >> my top financial person is nodding his head. it was timing issue and that was the problem. yes, we are up on schedule for what we would expect to be. >> thank you. >> any other comments? >> any public? do you have another page? is that it? >> yes. >> thank you, good job. any public comment on this item? hearing none, seeing none. item no. 7? >> avila. i don't think you are

finished because you haven't reported yet the current years only financial report, the current year for starting july 1st and the administrative portion. >> they are together in item 6. >> i did it wrong twice. pamela levine. cfo health services. i need to read the agenda more carefully, sorry. yes, i do want to talk about the financial, the first quarter financial report for the trust and for the general fund. this, as we all know and i'm sure you've heard in the past, when, this is a 3-month report. when you project with only 3 months of data, you are apt to have some inaccuracies. so right now we are projecting an increase

in our net assets of $21 million but there are a lot of things that could occur between now and the end of june that could affect that. the $21 million includes $13 1/2 million in assets and this as we mentioned before they are reserves and an analysis of stables reserves and contingency reserves that will be done and incorporated into next year. $2.8 million in favorable claims experiences in blue shields and nor the reported. $2.4 million in the shared dental plan and a reduction of $1 million

estimated medical hmo premium revenues avenue application of the early retirement reassurance program. this is the federal money being used. one of the things that happens is a reduction in the estimated hmo insurance premiums. 700,000 increase to account for the time between the fsa contribution and filing of claims. 800,000 for interest assuming that we have no significant increases in those year-end value including investments. 200,000 reduction for transfers to the general fund. so what does this mean? when you take the $21 million you add it to the $71 million that i was discussing before and you end up with $98.4

million. when you net out that $68.6 million for the obligations and reserves, you get a balance of $29.8 million, $30 million which is a more reasonable trusted size rather the 9.8 million. we are going to report to you as to how projections are coming into fruition and how that impacts our net year assets. we'll know more definitely by january or february timeframe. in terms of the general fund administrative budget, we are projecting a balance of $176,000 due to

delays in hiring. this is to recognize the fact that we have had, that hiring takes longer for some positions and then when you offer people positions, they don't immediately take them because they have lives to take care of, like for instance, our new wellness manager is moving from across the country. and she didn't come until after we made the offer. we are going to manage for the over the we have to do for the open enrollment which was discussed earlier. we are going to have to manage within getting that $176,000 in savings and make sure we don't over expend ourselves. we are also monitoring our budget as you know we are, it's been

delayed, but we are looking at in january having the completion of the moving of our offices to the first floor and that budget as you know with any kind of move and remodeling of anybody's house or office always cost more than we originally anticipate. we are going to have to manage with that carefully so we will. but i suspect that we will end the year after all of this is taken into account on budget or a little better. any questions on this part? >> any public comment on this item? seeing none, hearing none, item no. 7. >> the clerk: item 7. action

item reconciliation of kaiser medicare rate. >> good afternoon, neale kosher. nice to see everyone again. i'm going to walk you through the document labeled kaiser medicare rate final rate for 2014. when we met on june 13th of this year, we stated that the medicare advantage rates for kaiser were preliminary, that we needed to get additional information brought to kaiser. they cooked the final rates and they would let you know at that time. as soon as we knew what they were and then we can talk about how we decide what to do whether they would have to be higher, the rates or lower. we always hope because of the timing and everything comes in better and there is money to be appropriated in some fashion for the cost of the rates. we

finalized everything in the system. that is done to be clear on that part. so what happened was kaiser did their magic and got their final numbers and our number we posted at the 14th of june was $346.45. the final number is $344. that saves the city $2.8 million. which is a very good thing. they do their calculations. >> the city and three other employers. >> yes. all people that are part of the trust and there e other employers. there is a bit of an explanation on page four. they had one where they made it better and one if the medicare where they could have said we are not getting as much, but they said we are going to credit you. it's a double win. where they could have made the

prices different, it didn't happen. that being said, the question is on page 5. what do we do? this is the action of this discussion which is very brief. we have two things that we have written down, the first one says in 15, kaiser can do the final rate, hsf can choose the keep the amount. there is two statements here on page 5. and so we can refund the money or we can put the numbers into rates and with the point being if we put them into rates for 2015, that will make the rate low to the 330 range and when we get the number for 16, it might go up a higher normal

percentage. usually we are seeing the 3-5 percent increase to 7 percent increase. we need to be cognizant about that one aspect. with that, what we think we should do is, am i saying this correctly? i'm going to recommend and this is your decision, that we do nothing in terms of trying to figure out handout you to appropriate those numbers for 2014. we put the money aside and adjust the 2015 rates. we can even at the recommendation of hsf create a policy which i will bring to you in january that says since we'll always be in this position we'll go early, we are going to add or subtract every year and write a policy which you are very good at writing an appropriate and very sound policy so this is all understood. all of this about the reserves and the

fantastic audit report. i'm thrilled to that because you are well reserved. so we can say, in the years we are getting the money back from kaiser we can put it here and maybe pay the money back and then come up with a system for how to apply the rates. the bottom line is however we do this either through policy or actual liberal calculation, and reconciliation, i recommend you apply it to the calculation. you can do other approaches. are there any questions? >> so you are recommending option no. 2? >> yes, ma'am. >> any questions? >> dr. dodd? >> i apologize for not bringing this up on the call when we went through this. it occurs to me now, i forget the actuarial term but we even out our uhc

claims over a 3-year period, like a 3-year averaging. would that also be a consideration given the idea that we might get hit with 7 percent increase in 2017 that we'll put the money. >> that will smooth it out. that was the intent. yes. >> rather than do a full one in 2016. >> i would recommend we do a 3-year amortization when we have a cash applied to a rating structure so it will smooth it all out. so that the trim line stays at 3 percent a year which is what we want our medicare rates to do, to never go up.

>> just to be clear, we can see a decrease, a loss on this line item next year? >> going down because of the appropriation of $3 percent a year which is what we want our medicare rates to do, to never go up. >> just to be clear, we can see a decrease, a loss on this line item next year? >> going down because of the appropriation of the $2.8 million. it would be a decrease in the rate. >> the reconciliation could be a negative next year alone. i would fully support the smoothing out on an annual basis because we don't want to see these spikes. we want security and policy idea. i fully support that. >> can someone make the recommendation? >> i move we adopt option two with the following direction to our actuary that they draft policy recommendations that would include the concept of smoothing the rates over a 3-year period of time. >> i second that. >> okay. is that a motion?

>> it has been seconded. >> any comment. any public comment? all right. all in favor say, "aye". >> aye. >> all those opposed? it's unanimous. thank you. item no. 8. >> the clerk: item 8 discussion item regarding kaiser rates. elisa gatsby. >> good afternoon. i'm here to give you the kaiser negotiations. i'm here to remind everyone that we have a goal of completing these prenegotiations by descalso we can bring to you what we have discussed at the meeting. this is evaluating the funding

structures and alternatives to the i cm. integrated care management fee and the pledge cap for the fully insurance structure and looking at the performance guarantees and also looking to see if there is a possibility of in incentive programs and fee schedule. i'm going update our discussions since our last meeting and that will start on meeting no. 4 on september 12th. we did work looking at historical democratic reports from kaiser and i think i attached late, but it was an attachment and that was waiting for you when you arrived on the demographic reports. these demographic reports came to the same conclusion that the kaiser foundation had trended.

>> someone's cellphone is going off. >> sorry, the kaiser membership has trended younger over time. and so i think we are all on the same page. they are now with that in terms of it being a factor that has been included in our renewal and is clear that although the kaiser membership has grown and grown in all areas of young and old membership that over all the age has improved. we have a younger population than we've had in 2009. we also talked quite a bit about the risk study. one of the funding proposals we are considering is risk premiums and an agreement on how to do the risk study to determine the risk of the population. we have agreed on a medical and pharmacy all claim data based risk study that has

been initiated and we have the goal of completing that by february of 2014 for the board's review in march and if we meet that deadline we should be able to go with the pricing, if not we'll be informed of the risk of the populations and how we manage with them going forward. we have done a lot of work on our existing performance guarantee structures. this was primarily for 2014 and it was the basis for moving forward and looking for further enhancements in 2014. and producing quarterly meetings with health area leadership in kaiser. we have not met with the clinicians and really talk about the clinical issues that are going on in the population and how we can either develop our wellness

program or do other activities to try to focus on improvements. we are thinking this is a great opportunity for us and we'll be talking about not only clinical updates but market updates and trends in the market. we have enhanced clinical reporting also as a new performance guarantee which we'll talk about prevention and disease and lifestyle factors and health care intervention and in different programs and kaiser and that will be new information for us and we have taken the clinical metrics that are performance guarantees from 14-21 and 16 of those are now city and county specific metrics. they were northern california, kaiser wide metrics before and now they are specific to our population in what we really want to focus on and 11 of those are now

measures where kaiser will have to perform at the 90th percentile or above to meet with the performance. we have appreciative work to collaborate and continue to look for ways that both are focused in the right areas to improving health care. i think the other areas we are working on is the icm, integrated care management, and we haven't made as much progress as we had hoped and we are at a point where kaiser still believes that though they have lowered their fee schedule and increased the i cmf and they feel that approach is a way that kaiser delivers care. we are continuing to discuss it

but there isn't a whole a lot of progress being made in this area and we continue to put most of our effort now to see if there is something we can do in this area. the alternative funding proposals are ones that really are who are really now fully immersed in evaluating the different opportunities. i think there are several opportunities that the board will be able to evaluate in january and be able to look at what you think we pursue in the rates and benefits process in 2014. then we also had the opportunity to meet with some of the senior leadership at kaiser. the cfo and senior advice pred for actuarial service for underwriting and it was good to hear from the leadership of kaiser and i want to say the kaiser team we work with everyday, we didn't learn anything new because the kaiser team we worked with everyday

accurately portrayed the message from the scene -- senior leadership. it's a good thing that there is complete consistency with the team in terms of understanding how kaiser sets our annual premium amount and the process they go through for that. upcoming is a few more meetings. we actually canceled this week's meeting because we didn't have an agenda item. the 11/13 meeting was canceled. we have a meeting on the 12th. i want to say we are not just working on kaiser, we are also working on united health care and you will hear about that dashboard presentations later and we have some issues with the health care city plan and we are working on a solution for that. we are working on the other benefits options for united 13

and kaiser health care. that concludes my report. any other questions? >> questions? dr. dodd? >> i just wanted to thank commissioner scott for his participation in the meetings. not only do you bring a perspective from kaiser but an employer perspective and it adds to have a member of this decision making body present who talks the talk. so it's been great to have your participation. i know president brez lan has participated. it's like you are standing behind the staff and it makes a different. >> our actual rates and benefits, when do you think that will start? >> it starts in january through june. we are looking to get rolling in february. >> usually february. so you expect that same type of scrutiny out of the other

vendors that we've been doing with kaiser? >> absolutely. we are working with blue shield and united health care as well. this is the one where we are restructuring the funding and looking at different funding mechanisms which you heard in the audience that it's a big challenge to do and it takes a lot more work to do the funding part of it. there is a lot of work to see if we can redesign the active employee products for united health care because that product is as you know not, we can't sustain it. it's on life support. so, we have to, if we are going to save that, then we have to redesign it completely and i'm not even sure that's possible at this time but we are working on that area as well. i did want to mention that because it's

related we did receive a 3 page letter from one of our unions requesting information. i wanted to make sure that's communicated to the board. we'll bring that to the board at the next meeting with a response. >> thank you. any public comment on this item? >> seeing none, hearing none. oh, i'm sorry. >> harry bradshaw. i want to appreciate the information and the transparency at the board. it's not often that you create a powerpoint by the committee and it comes out a very high quality product. a couple questions about the kaiser negotiations, it maybe in front of me and i don't understand

the jargon. i know it talks about the capping at 4 percent. i'm sure it was for the funding models for 2015. i'm sure we are talking about not capping the profits this time around. limiting the icm and other medical services charges. i hear there is not a lot of progress made on that and i heard there was a goal of trying to limit the fees of 10 percent, are we on track for that or do you think it will be higher. with the accountability and transparency piece, is that, is part of the negotiations to get kaiser to report on the frequency on things like infections, unplanned hospital readmissions? and on the performance guarantees are they tied to rewards and penalties